The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court
AMENDED ORDER: (1) GRANTING DEFENDANT'S MOTION FOR SANCTIONS AND ATTORNEY'S FEES (Doc. No. 122); and (2) GRANTING DEFENDANT'S MOTION FOR COSTS (Doc. No. 123).
Presently before the Court is Defendant Darbun Enterprises, Inc.'s motion for sanctions and attorneys fee's (Doc. No. 122), and motion for costs (Doc. No. 123). For the reasons stated herein, the Court GRANTS both motions.
This matter involves the enforcement of a foreign judgment. Plaintiffs are eighteen individuals who were employed by a company in Mexico, and received a foreign judgment in their favor for unpaid wages. On January 12, 2009, Plaintiffs commenced an action in this court for recognition of the judgment under California law. The Complaint alleged subject matter jurisdiction based on diversity jurisdiction. The Complaint specifically alleged Defendant is a California Corporation with its principal place of business in California, and that Plaintiffs were all residents of Mexico.
On July 8, 2009, Plaintiffs filed a First Amended Complaint, again alleging subject matter jurisdiction, and further alleging Plaintiffs were citizens of Mexico. Ultimately, about fifteen months later on May 6, 2010, the Court sua sponte dismissed this action for lack of complete diversity, because one plaintiff, Delores Galvez Montes ("Galvez"), was found to be domiciled in California. In fact, Galvez has been a legal permanent resident in the United States since 2005, has maintained a residence in California, and is applying for United States citizenship.*fn1
On May 21, 2010, Defendant filed a motion for sanctions and attorney's fees under 28 U.S.C. § 1927 and the Court's inherent authority. On June 15, 2010, Defendant also moved for costs pursuant to 28 U.S.C. § 1919. The Court heard oral argument on both motions on July 19, 2010. Plaintiff's counsel, Philip Stillman, and Defendant's counsel, Bruce Sherman, were both present.
I. Motion for Sanctions and Attorney's Fees
Defendant moves the Court to require Plaintiffs' counsel to pay sanctions to Defendant in the amount of $148,442.89, the amount of attorney's fees and costs incurred by Defendant for work that is "unique to federal court and which will provide no benefit in a subsequent state action." (Declaration of Bruce Sherman ¶ 6, Ex. 6.)
Title 28 U.S.C. § 1927 permits a federal district court to require an attorney who "multiplies the proceedings in any case unreasonably and vexatiously" to pay "excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927.
"Sanctions pursuant to section 1927 must be supported by a finding of subjective bad faith." New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298, 1306 (9th Cir. 1989). "Bad faith is present when an attorney knowingly or recklessly raises a frivolous argument or argues a meritorious claim for the purpose of harassing an opponent." Id. "Tactics undertaken with the intent to increase expenses, or delay, may also support a finding of bad faith." Id. (internal citations omitted). The Ninth Circuit has held that recklessness suffices to assess § 1927 sanctions. Fink v. Gomez, 239 F.3d 989, 993 (9th Cir. 2001); B.K.B. v. Maui Police Dep't, 276 F.3d 1091, 1107-08 (9th Cir. 2002). In B.K.B. v. Maui Police Department, the Ninth Circuit explained that a finding of recklessness plus knowledge of the rules and applicable law is sufficient. Id. at 1106-1107.
The Court sets forth only those facts relevant to its determination of Defendant's motions. On January 12, 2009, Plaintiffs' counsel filed the Complaint, which alleged subject matter jurisdiction based on diversity jurisdiction, and that each of the eighteen plaintiffs "resides" in Tijuana, Baja California, Mexico.*fn2 (Compl. ¶¶ 2-22.) Plaintiff's counsel based these allegations on information he received from plaintiffs' Tijuana counsel and two plaintiffs, Tenorio Plata ("Plata") and ...